Even if you’re not following the day-to-day news in the world of big business, you can’t have missed the recent crash and burn of Bear Stearns. Not many of us are Senior Investors playing with billions of dollars, but there is a lesson for everyone from the teenager buying that first car to the future Warren Buffets of the world- if it doesn’t make sense, don’t do it.
The alarm bells were ringing a year ago (http://www.businessweek.com/bwdaily/dnflash/content/jun2007/db20070612_748264.htm) but many people kept their heads buried in the sand, and now they are paying the price. We should all think about this in our own business & personal affairs, from both sides of the fence.
If you’re investing in company or a financial venture, trust your gut feeling on what “feels right”. The Bear Stearns fiasco can be explained through very complex economics, but it can be best understood best from a simple view. No matter how you sugarcoat it, investing massive dollars in ultra high-risk investments is not going to have a positive outcome in the long run.
Likewise, if you’re borrowing and it feels like you’re over-extending yourself even though the bank is happy to lend you the money- you are probably right. Take a breather, and ask yourself if the debt load is one you can truly handle and NEED, or are you better to take a slower and safer path to growing your business?
Many people, like me, have built success without having to make risky investments, or take on overpowering debt. You can too, if you have the patience to avoid the temptation of fast-tracking with too much risk, and trust yourself to make the right moves at the right time.